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Firstrand Bank Limited t/a Wesbank v Adriaanse (19347/2013) [2015] ZAGPPHC 723 (13 August 2015)

75 Reportability
Contract Law
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Brief Summary

Execution — Return of leased vehicle — Plaintiff sought return of vehicle following defendant's default on lease payments — Defendant contended non-receipt of section 129 notice due to chosen domicilium address being within a security estate with no postal delivery — Court held that plaintiff complied with section 129(1)(a) of the National Credit Act by sending notice to correct address, and defendant’s failure to receive it was due to his own choice of address — Defendant ordered to return vehicle and pay costs of action.

Comprehensive Summary

Summary of Judgment


1. Introduction


This was an action in the Gauteng Division of the High Court, Pretoria, in which the plaintiff, Firstrand Bank Limited t/a Wesbank, sought contractual and statutory relief arising from the defendant’s alleged default under a motor vehicle lease agreement governed by the National Credit Act 34 of 2005.


The parties were a credit provider (the plaintiff) and the consumer/lessee (the defendant, Justin Adriaanse). The plaintiff sued primarily for return (recovery) of the leased vehicle, with any claim for damages to stand over, and for costs.


Procedurally, the matter came before the High Court for determination after pleadings had closed. The defendant delivered a plea and counterclaim raising, among other points, alleged non-compliance with the plaintiff’s statutory duty to deliver a section 129(1)(a) notice. The defendant also raised a case of reckless lending under section 81 of the Act, but this counterclaim was ultimately abandoned. The parties narrowed the dispute to a single determinative issue, namely whether the plaintiff had complied with section 129(1)(a), with the plaintiff bearing the onus and the duty to begin.


The general subject-matter concerned the enforcement of a credit agreement following default, specifically whether the statutory pre-litigation notice requirements under the National Credit Act had been satisfied, and the consequences for the plaintiff’s entitlement to enforce contractual remedies, including repossession.


2. Material Facts


The court treated as common cause that, on or about 27 October 2010, the parties concluded a lease agreement in respect of a 2009 BMW X5 XDRIVE48I (identified by engine and chassis numbers in the judgment). The agreement recorded the total rental price, a deposit of R120 000.00, monthly rentals payable over 58 instalments, and a balloon payment due on 20 November 2015. It was also common cause that the National Credit Act 34 of 2005 applied to the agreement and that the plaintiff would retain ownership of the vehicle during the term of the agreement, with options available to the defendant at the end of the lease.


It was further common cause that the agreement contained an address mechanism for notices. The defendant selected a physical address as the chosen address (domicilium) for legal notices, being a specified address in Mooikloof, 0081, and also furnished a separate postal address for other notices. The defendant admitted the contractual terms, including the term that legal notices were to be delivered to the chosen physical address.


On the plaintiff’s pleaded case, the defendant fell into arrears, with default alleged from August 2011, and arrears quantified at R48 210.53 at the time summons was issued. The plaintiff alleged that a section 129(1)(a) notice was delivered to the defendant, that the defendant did not respond, and that the defendant failed or refused to return the vehicle when required (including with reference to section 127 of the Act).


The defendant’s material factual stance on the section 129 issue was that he did not receive the section 129 notice at the chosen domicilium address because the address lay within a security estate where, according to him, there was no street postal delivery. He also relied on the existence of his separate postal address, contending that the plaintiff should have sent the notice there. In cross-examination, however, the defendant conceded that he had not notified the plaintiff of any alternative address for delivery of legal notices, despite knowing of delivery difficulties at the chosen address.


The plaintiff’s evidence on delivery was presented through an attorney witness who testified that a registered item was processed through the Garsfontein Post Office, with a first notification allegedly generated on 27 March 2012 and the item returned to sender on 30 March 2012, supported by a track-and-trace report. The court regarded it as not genuinely disputable that the notice was sent by registered mail to the correct chosen address and reached the relevant post office branch.


The defendant also called a security officer from the estate who described the estate’s system of mail delivery via post boxes outside the complex and the absence of street addresses. Under cross-examination and in response to questions from the court, the witness accepted that when sheriffs served documents, security would contact the relevant stand owner, and he further conceded that a similar procedure would be used for registered mail; he also indicated that mail addressed to a physical address would be placed into the correct post box.


Finally, the court recorded as common cause (or at least not denied) that the defendant’s last payment had been made in 2012, placing him in serious default, and that he had failed or refused to return the vehicle notwithstanding the agreement and the statutory return obligation referenced in the judgment.


3. Legal Issues


The central legal question was whether the plaintiff had complied with section 129(1)(a) of the National Credit Act prior to commencing litigation, given the defendant’s contention that the notice had not been received at the chosen domicilium address within a security estate lacking conventional postal delivery.


This dispute was primarily one of application of law to fact. The material facts concerning the chosen domicilium, the sending of the notice by registered mail, and the track-and-trace showing dispatch to a particular post office were evaluated against the statutory and constitutional-court standards for “delivery” of a section 129 notice. The issue was not framed as requiring a value judgment about fairness in the abstract, but rather as a determination of whether the plaintiff had taken the steps the law requires for delivery, and whether any alleged non-receipt could defeat compliance where the consumer’s own conduct was relevant.


A related enforcement consequence flowed from the section 129 determination: if compliance were established, the plaintiff would be entitled to proceed with enforcement remedies, including repossession of the vehicle, and the court would consider the contractual and statutory basis for the return order and the costs order, including the costs implications of the defendant’s abandoned reckless lending defence.


4. Court’s Reasoning


The court approached the matter by identifying section 129(1)(a) as a pre-enforcement statutory requirement: before commencing litigation after default, a credit provider must deliver a notice drawing the default to the consumer’s attention and proposing referral to debt counselling or other dispute resolution mechanisms.


In applying the governing law on “delivery,” the court relied on the Constitutional Court’s guidance in Sebola and Another v Standard Bank of South Africa Ltd and Another 2012 (5) SA 142 (CC), which the court read as rejecting any general requirement that the section 129 notice must be brought to the consumer’s actual attention, and likewise rejecting any general requirement of personal service. The court treated Sebola as establishing that, where a consumer has chosen a domicilium address, and the credit provider sends the notice by registered mail, the credit provider must ensure that it is sent to the correct chosen address and to the correct post office.


The court further relied on Kubyana v Standard Bank of South Africa Limited 2014 (3) SA 56 (CC) for the proposition that, once the credit provider has taken the steps required to bring the notice to the consumer’s attention, a reasonable consumer who is notified by the post office that a registered item awaits collection is expected to collect it. The court cited Kubyana’s explanation that production of a track-and-trace report showing dispatch to the correct post office and that a notification was sent will generally suffice to show discharge of the credit provider’s delivery obligations; thereafter, the consumer bears an evidentiary burden to explain why it would not be reasonable to expect the notice to have reached their attention if they seek to avoid the consequences.


On the facts, the court accepted that the plaintiff had sent the section 129 notice to the defendant’s chosen address, and that the registered item reached the Garsfontein Post Office. The court regarded these facts as satisfying the credit provider’s obligations as articulated in Sebola and Kubyana, particularly given the agreement’s domicilium clause and the use of registered mail.


The defendant’s principal response was that he could not have received the notification because the chosen address was within a security estate without street delivery. The court treated this as irrelevant to the plaintiff’s compliance, because the defendant had elected that address as the chosen address for legal notices while being aware of the delivery difficulties, and he had not alerted the plaintiff to any alternative address for legal notices. The court reasoned that it could not be expected of the plaintiff to know of those difficulties absent notice from the defendant, and that the plaintiff had taken the necessary steps to bring the default to the defendant’s attention as contemplated by the Act.


In addition, the court referred to Rossouw and Another v First Rand Bank Limited 2010 (6) SA 439 (SCA) as supporting the relevance of the statutory address provisions, indicating that section 96 (dealing with addresses for delivery of legal notices) is relevant and must be read with section 65(2). On the court’s approach, compliance was established through the combination of correct addressing, registered dispatch to the correct post office, and the statutory scheme governing delivery to chosen addresses.


Having found section 129 compliance, the court turned to the consequences of default and enforcement. It noted that it was not denied that the defendant had last paid in 2012 and was therefore in serious default. It also held that the defendant had failed or refused to return the vehicle despite the contractual clause requiring return upon breach and the return obligation mentioned with reference to section 127. These considerations supported granting the return order sought.


On costs, the court considered there to be no reason to deprive the plaintiff of its costs. It also made an evaluative determination that, although the defendant had abandoned the section 81 reckless lending defence/counterclaim, the plaintiff should nevertheless recover the costs associated with preparation, appearance, and witnesses that would have dealt with that abandoned issue.


5. Outcome and Relief


The court granted judgment in favour of the plaintiff.


The defendant was ordered to return the specified 2009 BMW X5 XDRIVE48I (with the engine and chassis numbers as set out in the order) to the plaintiff.


The issue of damages arising from the defendant’s breach of the agreement was ordered to be postponed sine die.


The defendant was ordered to pay the costs of the action, including costs for preparation, appearance, and the witnesses who would have testified in relation to the defendant’s abandoned defence based on section 81 of the National Credit Act.


Cases Cited


Sebola and Another v Standard Bank of South Africa Ltd and Another 2012 (5) SA 142 (CC).


Kubyana v Standard Bank of South Africa Limited 2014 (3) SA 56 (CC).


Rossouw and Another v First Rand Bank Limited 2010 (6) SA 439 (SCA).


Legislation Cited


National Credit Act 34 of 2005, section 65(2).


National Credit Act 34 of 2005, section 81.


National Credit Act 34 of 2005, section 96(1)–(2).


National Credit Act 34 of 2005, section 127(1)(b)(ii).


National Credit Act 34 of 2005, section 129(1)(a).


National Credit Act 34 of 2005, section 130.


Rules of Court Cited


No rules of court were cited in the judgment.


Held


The court held that the plaintiff had complied with section 129(1)(a) of the National Credit Act by sending the notice by registered mail to the defendant’s chosen domicilium address, and that proof that the item reached the correct post office and generated notification was sufficient to establish delivery in accordance with the Act as interpreted in the binding authorities cited.


The court further held that the defendant’s claim of non-receipt, based on the nature of the security estate and lack of street delivery, did not defeat compliance where the defendant had chosen that address for legal notices, knew of delivery difficulties, and did not inform the plaintiff of any alternative address for delivery of legal notices.


Consequently, the court held that the plaintiff was entitled to the contractual and statutory enforcement relief sought, including return of the vehicle, with damages standing over, and that the plaintiff was entitled to costs, including costs linked to the defendant’s abandoned reckless lending defence.


LEGAL PRINCIPLES


The judgment applied the principle that section 129(1)(a) does not impose a universal requirement that the notice must come to the consumer’s actual attention, nor does it generally require personal service, where the credit provider has used registered mail and complied with the statutory delivery framework as interpreted by the Constitutional Court.


It applied the principle that, where a consumer has chosen a domicilium address, a credit provider satisfies its delivery obligation by sending the section 129 notice by registered mail to the correct chosen address and ensuring it is routed to the correct post office, with track-and-trace evidence generally establishing compliance.


It applied the further principle that once the credit provider shows registered dispatch to the correct post office and notification by the post office, the consumer bears a burden to provide a cogent explanation if they contend it is not reasonable to expect the notice to have reached their attention; unreasonable consumer conduct leading to non-receipt does not negate delivery for purposes of the Act.


Finally, the judgment applied the principle that a party who abandons a pleaded defence (here, reckless lending under section 81) may still be mulcted in costs that were reasonably incurred by the successful party in preparing to meet that defence, depending on the court’s costs discretion as exercised on the case’s facts.

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[2015] ZAGPPHC 723
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Firstrand Bank Limited t/a Wesbank v Adriaanse (19347/2013) [2015] ZAGPPHC 723 (13 August 2015)

SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
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SAFLII
Policy
REPUBLIC OF SOUTH
AFRICA
IN THE GAUTENG
DIVISION OF THE HIGH COURT OF SOUTH AFRICA,
PRETORIA
JUDGMENT
Date:
13/8/15
Case
No:  19347/2013
Reportable
/Not
reportable
FIRSTRAND BANK
LIMITED t/a
WESBANK
Plaintiff
and
JUSTIN
ADRIAANSE
Defendant
JUDGMENT
MNGQIBISA-THUSI,
J
[1]
The plaintiff seeks the following relief against the defendant
relief:
1.1
the return of a 2009 BMW XS XDRIVE481 AfTCE70, with engine number
50754408 and chassis
number WBAFE82050LK28188 (the vehicle);
1.2
that any damages arising out of the defendants breach of the
agreement be postponed
sine die;
1.3
that the defendant pays the costs of the action.
[2]
The following facts are common cause:
2.1
on or about 27 October 2010 the plaintiff and the defendant concluded
a lease
agreement for the leasing of the vehicle on the following
terms:
2.1.1
that the total rental price would be R796 100.44 (inclusive of VAT)
together with interest
at a fixed rate of 13% per annum;
2.1.2
that on the date of the conclusion of the agreement the defendant
would pay the plaintiff
a deposit in the amount of R120 000.00;
2.1.3
that the monthly rental would be R11 899.34 per month, payable over
58 consecutive monthly
instalments, with the first instalment payable
on 20 December 2010;
2.1.4
that a final instalment of R184 320.00 (balloon payment) would be
payable on 20 November
2015;
2.1.5
that the provisions of the National Credit Act 34 of 2005 (the Act)
would be applicable
to the lease agreement;
2.1.6
that the
address to which
all legal
notices would
be
delivered at the defendant's
physical
address,
being the
chosen
domicilium
address,
being
number [.....], Mooikloof, 0081, and
all
other
notices at his postal
address
[1]
2.1.7
that the plaintiff retains ownership of the vehicle for the period of
the agreement; and
2.1.8
that at the end of the lease agreement the defendant has the option
of either returning
the vehicle to the plaintiff or purchase the
vehicle from the plaintiff or enter into a new agreement with the
plaintiff to refinance
the vehicle.
[3]
In its particulars of claim the plaintiff alleges that:
3.1
the defendant has defaulted on his payments since August
2011 and
was, at the time summons was issued, in arrears in the amount of R48
210.53;
3.2
a
notice
in terms
of section
129(1)(a)
[2]
of the Act
was
delivered
to the
defendant;
3.3
the defendant failed to respond to the section 129(1)(a)
notice; and
3.4
the
plaintiff has failed or refused, as required by section 127
[3]
of the Act,
to return
the vehicle to
the
defendant;
[4]
In its plea and counterclaim the defendant:
4.1
denies that the plaintiff complied with the provisions of section 129
(1)(a)
in that it had not received the section 129 notice as its
domicilium
address as an address is situated within a
security estate which does not have any postal delivery service.
4.2
alleges that even though it is in default with its payments, the
plaintiff is
in breach of section 81 of the Act in that the loan
agreement amounted to  reckless  lending. However,  the
defendant
has  abandoned  its counterclaim in
which it relied on the provisions of section 81 of the Act;
[5]
The issue to be determined is whether the plaintiff has complied with
the provisions of section 129(1)(a) of the Act. The parties
agreed
that the plaintiff bore the onus of proving compliance with section
129(1)(a) and that the plaintiff had the duty to begin.
[6]
The plaintiff called only one witness, Mr Eugene Botha (Mr  Botha),
an attorney employed by Hack, Stuppel and Roos,
the plaintiffs
attorneys. Mr Botha outlined the terms and conditions as set out in
the agreement, in particular, the clauses relating
to delivery of
notices and legal notices. Mr Botha explained that in terms of the
agreement the defendant had chosen number 13
Naval Escourt, Mooikloof
as his
domicilium
address. Mr Botha testified that he
had been in contact with a post office official who informed him that
the Garsfontein Post Office
had sent a first notification to the
defendant on 27 March 2012 that he had a registered item at the Post
Office. Further, that
on 30 March 2012 the registered item was sent
back to sender (Roodepoort HUB). Mr Botha further testified that the
track and trace
report was discovered by the plaintiff.
[7]
In his testimony, the defendant admitted the terms and the conditions
of the loan agreement, including the fact that he had
chosen his
physical address as a chosen address to which legal notices should be
sent. The defendant testified address chosen was
a vacant stand and
that there is no way that he could have received the notification
from the post  office. Further, the defendant
testified that he
had also given the plaintiff his postal address and did not
understand why the plaintiff did not send the section
129 notice to
this postal address.
[8]
During cross- examination, the defendant testified that he had not
notified the plaintiff of an alternative address even though
he was
aware that no postal deliveries could be done at the chosen
domicilium
address. He testified that there are post boxes
outside the security complex in which mail is placed. Defendant
conceded that without
the relevant post box number it would be
difficult to place mail into the correct post box.
[9]
The defendant called Mr Phillipus Hattingh (Mr Hattingh), a security
officer at the estate where the defendant's
domici/ium
address
is located. Mr Hattingh testified that mail at the security complex
was delivered into post boxes situated outside the complex
and that
there was no street addresses. During cross-examination, Mr Hattingh
testified that when a sheriff comes to the complex
to effect service,
the. relevant stand owner is called by security to accept service. He
conceded that the same procedure would
be used with regard to
registered mail. In response to a question by the court, Mr Hattingh
testified that if mail were addressed
to a physical address, it would
be put into the correct post box.
[10]
Section
129(1)(a)
of
the
Act
requires
a
credit
provider,
in
the
event
of
a
customer
defaulting
on
his
or
her
payments
and
before the
credit
provider
commences
litigation,
to
deliver to
the
consumer a
l
etter
of
demand
as
contemplated in
section
129(1)(a).
In
Sebola
and
Another
v Standard bank of
SA
Ltd
and
Another
[4]
the
Constitutional
Court
held
that
in terms
of
section
129(1)(a) read with section
130 of the
Act, there was no general requirement
that the
S129(1)(a) notice be brought to the actual attention of the consumer,
or that
personal
service
(as
suggested
by counsel
for
the
defendant)
to
be
effected.
Further,
the
court
held
that
where
the
consumer
has
chosen
a
domici/ium
address,
if
the
notice is sent by registered mail, which is
the safest
way of
sending mail, the credit provider must make sure that
it is sent
to the
correct
chosen address and to the correct post office.
[11]
As
stated
in
Kubyana
v
Standard
Bank
of
South
Africa
Limited
[5]
,
once
a
service
provider has taken the necessary
steps in
order to bring
to the
notice
of
the consumer the section 129(1)(a) notice, it is expected of the
reasonable
consumer,
once notified by the post office that he has a registered item, that
he would
collect
the
registered
item.
Furthermore,
the
court
in
Kubyana
(supra)
stated
that:
"[53) Once a credit
provider has produced the track and trace report indicating that the
section 129 notice was sent to the
correct branch of the Post Office
and has shown that a notification was sent to the consumer by the
Post Office, that credit provider
will generally have shown that it
has discharged its obligations under the Act to effect delivery. The
credit provider is
that stage entitled to aver that it has done what
is necessary to ensure that the notice reached the consumer. It then
falls to
the consumer to explain why it is not reasonable to expect
the notice to have reached her attention if she wishes to escape the

consequences of that notice. And it makes sense for the consumer to
bear this burden of rebutting the inference of delivery, for
the
information regarding the reasonableness of her conduct generally
lies solely within her knowledge. In the absence of such
an
explanation the credit provider's averment will stand. Put
differently, even if there is evidence indicating that the section

129 notice did not reach the consumer's attention, that will not
amount to an indication disproving delivery if the reason for
non­
receipt is the consumer's unreasonable behaviour".
[12]
In
the present
case,
i
t
cannot be disputed that the plaintiff sent the section 129 notice to
the
correct
chosen
address
of
the
plaintiff
and
that
the
registered
item
did
reach
the
relevant Post Office (Garsfontein).
In
Rossouw
and
Another
v
First Rand Bank Limited
[6]
the
court stated that:
"[29] It appears to
me that s 96, which deals with the address for delivery of legal
notices and a s 129(1)(a) notice by its
very nature must fall into
this category - is relevant for present purposes and must be read
with s65(2)".
[13]
The fact that the defendant did not receive the registered mail
notification as he alleges that there are no street deliveries
at the
address he chose, is irrelevant. The defendant elected the address to
which the section 129 notice was sent aware of the
fact that there
were difficulties with postal deliveries at that address. It could
not be expected of the plaintiff to have known
of these difficulties
unless the defendant alerted it to them. I am satisfied that the
plaintiff has indeed taken the necessary
steps to bring to the
defendant's attention, his default.  I am satisfied that the
plaintiff has shown that it had
complied
with the provisions
of section
129(1)(a)
read with
the provisions
of
section
65(2) and 96
[7]
.
[14]
It is common cause, as it has not been denied by the defendant, that
the last payment the defendant made was in 2012. The defendant
is
therefore in serious default of his obligations under the agreement.
It is also not in dispute that the defendant has failed
or refused to
return the vehicle to the plaintiff even though the agreement, in
particular, clause 12.4.4, read with the provisions
of section 127 of
the Act, obliges a debtor to return the vehicle if he is in breach of
his payments on the rental of the vehicle.
[15]
I am satisfied that the plaintiff has shown sufficient cause for the
relief prayed for and that an order in terms of the particulars
of
claim should be granted.
[16]
With regard to costs, there is no reason why the plaintiff should be
denied the costs of this application. Furthermore, I am
of the view
that, even though the defendant has abandoned his defence and/or
counterclaim based on section
81
of the Act,  the  plaintiff  is entitled to  costs
attendant  to  preparation,
appearance
and the witnesses who would have testified on behalf of the plaintiff
with regard to the defendants abandoned defence.
[17]
Accordingly, the following order is made:
17.1
That the defendant return the 2009 BMW XS XDRWE481 A!TCE70, with
engine number
50754408 and chassis number WBAFE82050LK28188 (vehicle)
to the plaintiff;
17.2
That any damages arising from the defendant's breach of the agreement
be postponed
sine die;
17.3
That the defendant pays the costs of the action, including costs for
preparation,
appearance and the witnesses who would have testified
with regard to section 81 of the Act.
___________________________
N
P
MNGQIBISA-THUSI
Judge
of the High Court
Appearances
For
the Plaintiff: Adv Du Plessis
Instructed
by: Hack Stuppel & Ross Attorneys
For
Defendant: Adv Swart, SC Instructed by: Etienne Naude Attorneys
[1]
Clause 17.2 of the agreement provides that:
"U
kies die fisiese adres wat u in die Kwotasie/Krediet koste
verskaf
het,
as
die
adres
waar
regskennisgewings ingevolge
hierdie
ooreenkoms
vir
alle
doeleidings nan
hierdie
Ooreenkoms
beteken kan
word."
[2]
Section 129(1)(a)
of
the
Act
provides
that
"(1)
I
f
the
consumer
is
in
default
under
a
credit
agreement,
the
credit
provider
may
draw
the
default
to
the
notice
of
the
consumer
in writing
and
propose
that
the
consumer
refer
the
credit
agreement
to
a
debt
counsellor,
alternative
dispute
resolution
agent,
consumer
court or
ombud with jurisdiction, with the intent that the parties resolve
any
dispute
under the
agreement
or develop
and agree on a plan to bring the payments
under the
agreement up
to
date".
[3]
Section 127 (1}(b}(ii) of the Act provides that: "otherwise
return the goods that are the subject of that
agreement
to the credit provider's business during ordinary business hours
within five business days after the date of the notice
or within
such other period or at such other time or place as may be agreed
with the credit provider."
[4]
2012 (5) SA 142 (CC).
[5]
2014 (3) SA 56 (CC).
[6]
201O
(6)
SA
439 (SCA).
[7]
Section
96
(
1
)
and
(2)
provide
that:
"(1)
whenever
a
party
to
a
credit
agreement
is
required
or wishes
to give
legal
notice to the
other
party for
any
purpose
contemplated
in the
agreement,
this
Act or any
other
law,
the
party
giving
notice
must deliver
that
notice to
the
other
party at-
(a)
the
address
of
the
party
as set out in the agreement,
unless
paragraph
(b)
applies,
or (b)the
address
most
recently provided
by the
recipient
in
accordance
with
subsection
(2).
(2)
a party to a credit agreement may change their address by delivering
to the other party a written
notice
of the new address by hand registered mail, or electronic mail, if
that other party has provided an email address."

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